SAN FRANCISCO, CA - SEPTEMBER 12: The new iPhone 5 is displayed during an Apple special event at the Yerba Buena Center for the Arts on September 12, 2012 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)

Today: As Apple's (AAPL) stock continues to dive, analysts' thoughts on company and its manufacturing begins to turn. Also: Wall Street's post-election blues persist as tech stocks fail to find a solid footing.

Apple continues to plunge on Wall Street, but analysts see hope

Apple's slide on Wall Street continued Thursday, with the Cupertino company's stock dropping to its lowest point since mid-May and almost taking its market capitalization below $500 billion, but analysts reported that the production issues that sparked some doubts about the company's performance have eased.

Apple shares descended as low as $535.29 in Thursday trading, its lowest mark since May 21, and 24.1 percent lower than the company's all-time high of $705.07, reached the day Apple launched the iPhone 5. Apple sold 5 million iPhone 5 units in the first three days of availability, but failed to meet demand for the popular smartphone's newest iteration, sparking concerns about Apple's production capacity.

While those concerns have persisted and were verified by Apple manufacturing partner Foxconn on Wednesday, analysts reported that the issues were beginning to ease in notes on Thursday, while others presented a rosier picture of the stock than its current standing.

BTIG Research analyst Walter Piecyk reported that the iPhone 5 is no longer taking three to four weeks to arrive after an online order, with shipments from the three major carriers showing one-week delays instead, a sign that the backlog is clearing in Apple's production cycle.

"Product supply no longer appears like it will be an issue this quarter and there should be some carry-over demand from a supply constrained iPhone 5 launch in September. In addition, the company expects to launch the iPhone 5 in China in December," further advancing sales, Piecyk reported in an email.

Stern Agee analyst Shaw Wu revealed in a note Thursday that his checks on Apple's supply chain show that, while Foxconn still faces challenges as its chairman said Wednesday, those issues have moved from securing enough components such as the vaunted screen to actual manufacture of the devices, an important change.

"The supply chain bottleneck has moved from components to the assembly itself. However, we continue to pick up much improved capacity in our supply chain work," the analyst wrote Thursday, later adding that Foxconn has pushed its output higher despite Apple's "very high standards where it aims to produce each model to be an exact replica where variance is measured in microns."

Wu reiterated that he expects Apple to sell 46.5 million iPhones in the current quarter, while Piecyk forecasts 47.5 million smartphone sales in the current quarter.

Two analysts' reports Thursday gave the other side of that coin, however: Apple has dropped too far and deserves to be purchased during its point of weakness. Oppenheimer analyst Ittai Kidron reported Thursday that he believes Apple will rebound to about $620 in the near term and reiterated his $800 12-month price target for the stock.

"We believe Apple's competitive position is unchanged and see it better position with a refreshed portfolio across all key segments heading into 2013. We see good potential for a rebound as iPhone/ iPad demand holds up. Buy on weakness," Kidron wrote in a Thursday note.

Jeffries analyst Peter Misek is even more bullish on the stock, reiterating his price target of $900 in a Thursday note and predicting 53 million iPhones sold in the holiday quarter.

The analysts' opinions had no effect on the direction of Apple's stock price Thursday, however, as it closed with a 3.6 percent loss at $537.75 and remained in "bear market" territory. The company's market cap -- which hit a U.S. record earlier this year -- fell perilously close to $500 billion, closing at $505.9 billion. Apple became just the sixth company to obtain a market cap, which measures the total worth of all shares in a company, higher than $500 billion earlier this year and has remained atop that level since May.

The Nasdaq and Standard & Poor's 500 indexes had little chance of gaining with Apple's large fall -- "With its huge market cap, as Apple goes, so goes the broader market," RidgeWorth Capital Management senior strategist Alan Gayle told Bloomberg News -- but even the Apple-less Dow Jones fell 0.9 percent on the day, as investors continued to sell stocks on fears of European economic struggles and a congressional deadlock on the "fiscal cliff" in the United States.

"With the election over and the fiscal cliff right at the front of everybody's mind, coupled with more signs of trouble out of the euro zone, you're seeing a lot of people take some money off the table," Sean Kelly, head of institutional equity trading at Knight Capital Group, told the Wall Street Journal.

The technology sector posted its second straight dismal performance, as the tech-heavy Nasdaq was the worst-performing major index with a 1.4 percent drop and the SV150 index of Silicon Valley's largest tech companies declined 2.2 percent.

Hewlett-Packard (HPQ) and Intel (INTC) did their part to buck that trend, announcing new Itanium servers combining the technology of both titans of the valley with a chip that was the focus of a spirited lawsuit between HP and Oracle (ORCL). HP managed a gain for the day of 1 percent, but Intel's gains dissipated by the end of the session, when it closed with a loss of 0.4 percent. HP's former foe, Oracle, lost 1.2 percent but continued its run of cloud-based acquisitions, announcing the purchase of Santa Clara's Instantis for an undisclosed sum.

The biggest tech merger of the day was announced after the bell, with travel website Priceline buying competitor Kayak for $1.8 billion. Priceline agreed to pay $40 a share for the Connecticut company less than four months after it exercised an initial public offering that pushed shares out at $26 apiece.

And the widely watched Standard & Poor's 500 index: Down 17.02, or 1.22 percent, to 1,377.51

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.